Tata Motors shares rise on fund-raising plan recast

V.Phani Kumar

HONG KONG (MarketWatch) -- Shares of Tata Motors climbed Thursday after the company scrapped a $690 million rights issue of convertible preference shares to avoid a sharp increase in its share capital.

The company, India's largest automaker by revenue, was to refinance a part of the bridge loans it raised to finance its $2.3 billion acquisition of the Jaguar and Land Rover brands from Ford Motor Co.
F, +1.38%
earlier this year, with the proceeds.

In a statement Wednesday, Tata said that in place of the planned rights issue of convertible preference shares to raise 30 billion rupees ($690 million), the company now intends to monetize "a part of the company's investments through a phased divestment of certain investments at prevailing market prices over the next six to eight months."

Tata didn't detail which investments it planned to sell.

The company, however, said it will proceed with two other planned rights issues to raise about 42 billion rupees ($965 million).

In late May, the company said it planned to raise a total of 72 billion rupees via three unlinked but simultaneous rights issues. They included a rights issue of ordinary shares to raise 22 billion rupees and a rights issue of A shares with differential voting rights for 20 billion rupees, in addition to a rights issue of convertible preference shares for 30 billion rupees.

The company's shares slumped soon after the announcement as investors feared a large dilution in the company's share capital.

Tata
TTM, -5.92%
shares jumped 3.9% to 440.55 rupees in early trading in Mumbai on Thursday, even as the benchmark Sensitive Index dropped 0.7% to 14,579.85.

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